written by Maarten de Kok from Trendmark
Big data is the new black gold. The biggest of big data is internet search data. Google processes 3.8 million search queries every 60 seconds. People search for almost anything: porn, vegan recipes, but also for your company and your competitors.
This blog shows that internet search fulfills the three criteria of a ‘wise crowd’. Investors, managers and consultants can use this wisdom to monitor the competition and to support important strategic decisions.
Internet search for new banking platforms signals two main points:
- Adoption of new platforms started more than a decade ago.
- A new shift is under way: mobile banking is replacing internet banking.
Wisdom for incumbent banks is to shift attention from their (desktop) internet platform to a mobile platform.
The main point of this blog is: Internet search fulfills all three key criteria of a wise crowd: diversity, independence and decentralization. Google Trends aggregates all the information and the Trendmark Frequency Scale puts it in perspective. Managers using internet search to support their decisions can now abandon downtrends early and capitalize on uptrends from the outset.
Intelligent decision making
James Surowiecki’s book “the wisdom of crowds” outlines the three key criteria for a ‘wise’ crowd: diversity, independence and decentralisation. The idea behind this wisdom is not that a very large group will always give you the right answer, but that on average it will consistently come up with a better answer than any individual could provide. Fund managers know how hard it is to beat the market index.
- Diversity of opinion.
Literally everyone’s opinion on what is important, or not, is embedded in internet search data. Google has a near monopoly in search with a 92% market share. The number two, Bing, has 2%. When nearly everyone uses one source for search, diversity is guaranteed. In a sense internet search is like a window of the mind of humanity.
No one is telling or forcing you to search for specific information, except perhaps your professor. (Indeed, we can observe an academic seasonal pattern.) Because early adopters also search, all new information is incorporated into the data.
Finally, with 4.4 billion people using the internet in 2019, search is very much a local phenomenon. Indeed, new trends like mobile banking are picked up faster in certain countries like Germany and the United States.
Aggregation of wisdom
Decentralisation has a weakness. There needs to be a method to aggregate the information of everyone in the system. On financial markets this aggregation of wisdom is done through markets setting prices. With internet search the aggregation is done in Google Trends.
However, Google makes it very difficult to fully utilize their internet search gold mine. All their data is normalized and set between 0 and 100, with 100 being the point in time when search was at a peak. Trendmark has solved that problem with the Frequency Scale where all search is plotted on one single scale. This enables users to know if something is searched for frequently or not and if a trend is significant or not.
Harvesting the wisdom of crowds
So how use this wisdom of 4.4 billion internet users? Search is useful to monitor the competition and to support strategic decision. A structural downtrend of internet search for a product-market can support taking the difficult decision to abandon it.
Successful managers can also spot new trends at the outset and capitalize on them. Recognizing a structural uptrend in search of new product-markets with lots of potential such as virtual reality, is an example of such a pot of gold.
Go to Google Trends and play around for yourself. Find out how much information is at your fingertips. And when you get frustrated with the limitations imposed by Google, you can contact Trendmark for an elaborate and consistent analysis.